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Service liberalization and productivity in high‐tech firms: Evidence from China

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  • Xuchao Li
  • Jing Zhao
  • Ruomeng Yang

Abstract

This article studies the relationship between service liberalization and the productivity of high‐tech manufacturing. Examining the sudden relaxation of FDI regulation in several service sectors in China, this article finds that service liberalization improves high‐tech firms' TFP. The effect is greater in non‐SOEs, firms with a higher degree of service dependence, and firms located in regions with better institutional environments. Furthermore, after service liberalization, high‐tech firms of all sizes have more outsourcing service expenditures and spend less on intermediate inputs. Only large‐sized high‐tech firms increase their R&D expenditures to improve production efficiency.

Suggested Citation

  • Xuchao Li & Jing Zhao & Ruomeng Yang, 2024. "Service liberalization and productivity in high‐tech firms: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 32(4), pages 1607-1644, September.
    • Handle: RePEc:bla:reviec:v:32:y:2024:i:4:p:1607-1644
    DOI: 10.1111/roie.12745
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